US Student Lender To Explore Launching Mortgage REIT?

Social Finance Inc. reportedly plans to launch a real estate investment trust.

San Francisco based marketplace lender SoFi may be looking to start up a real estate investment trust (REIT) that would acquire the mortgages that are distributed by the platform, according to Bloomberg. The platform is considering this idea as a method of securing new funds at lower costs to lend out long term.

REITs (Real Estate Investment Trusts) are investment vehicles for real estate – comparable to a mutual fund – that allow investors to acquire ownership in real estate deals, including the likes of apartment complexes, hospitals, office buildings and so on.

Founded in September 2011, SoFi is a marketplace lender that provides student loan refinancing, mortgages and investment management services to young professionals. The platform passed the $6 billion mark in cumulative lending last December and closed a $1 billion Series E investment round at a valuation of $4bn last October.

These rumours follow on from the recent appointment of Anshu Jain – Deutsche Bank's former co-Chief Executive Officer – as an adviser. Jain joins SoFi six months removed from his resignation from Deutsche Bank, where he spent 15 years in total – 4 as co-CEO, succeeding Josef Ackermann. Mike Cagney – SoFi Chief Executive Officer – argued that Jain will provide the platform with invaluable expertise in the development of future strategies as well as in forging ties with new capital-markets partners.

If these rumours turn out to be true, SoFi would become the first marketplace lender to have launched an REIT. The platform leads the way in the securitisation space, with the likes of CommonBond now following suit. As a platform that supplies high potential borrowers with low rate loans, the onus is on SoFi to continually search for innovative methods of sourcing low-cost funding. The REIT represents another potential solution. We’ll keep an eye out for details.